Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on August 5, 2017 at 5:21

There are 6 producing Hosston wells in Section 33 - 12N - 15W, all operated by Comstock Resources.  Although there are no Haynesville Shale wells in that section, it is highly likely that Comstock holds the deep rights.  Since you have an old lease, it begs the question: are you now receiving, or have you ever in the past received, any royalty payments?

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Permalink Reply by shelby on August 6, 2017 at 6:14

Skip,

I have found evidence of an old lease, 1986, to a sole individual, 3yr term, but never recorded

any royalty payment from him. Am however, receiving royalty payments from Comstock. So, it

leaves me to wonder whether the lease was assigned, or, all or part of our mineral acreage was

pooled into a unit operated by Comstock.

Thanks

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Permalink Reply by Skip Peel - Mineral Consultant on August 6, 2017 at 6:19

Yes, since production began in 1986, and has been continuous since that time, the old lease is still in effect.  There is no requirement for a lessee (the entity taking the lease) to inform the lessor (the owner of the mineral right) when that lease is assigned.  The first time most lessors are made aware of a change of operator is when they hear from the new operator upon taking up responsibility for royalty payments.  If memory serves, there were three prior operating companies before the leases in that section were assigned to Comstock.

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Permalink Reply by shelby on August 6, 2017 at 6:53

Thanks Skip,

I admire your memory, it took me an hour or two, just to find the old lease on my end.

I am beginning research to determine if any "deep rights/severance" options might

apply, since the Haynesville strata has not been targeted. May be out of my league

on this one, but, understand the possibilities might exist, based on the principal of non-

production of identified zone capable of producing oil and gas. Next stop probably will

need to be attorney's office, to see if severance of deep rights is even possible.

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Permalink Reply by Skip Peel - Mineral Consultant on August 6, 2017 at 7:10

You're welcome.  If your lease has an Exhibit page with specific language exempting the deep rights, you can spend some money on an attorney.  If it does not, don't waster your time or money.  Comstock will not release their "all depth" rights because you ask or even if you threaten litigation.  An experienced and honest O&G attorney will tell you the same.  IMO Comstock will get around to drilling Haynesville Shale wells in your section eventually as your area is generally considered to be economic for Haynesville and Bossier shale.

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Permalink Reply by shelby on August 6, 2017 at 9:01

Skip,

As always, appreciate your comments and opinions.

Shelby

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Permalink Reply by Steve P on August 6, 2017 at 17:21

i own some mineral rights in that area, with Comstock owning the deep rights. Lease is held by small production from several Hosston wells. Comstock has taken out 4 or 5 HA permits over the past few years, and they have all expired.

For reasons not clear to me, this area (maybe 5 or 6 sections or more) seem to be in a black hole for HA wells. Comstock holds the deep rights in much of that area via a farmout from BP.

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Permalink Reply by shelby on August 7, 2017 at 1:11

Steve P,

Hey neighbor, thanks for your comments. By "black hole" I guess you mean

that no one has gone in, or, come out, regarding drilling. I guess with the market

what it is for NG, might not expect any deep drilling in the near future, but, I

believe it will come when prices rise. Sounds about right with BP, at one time

they were paying us royalties in this area. Good Luck.

Shelby

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Permalink Reply by Skip Peel - Mineral Consultant on August 7, 2017 at 1:52

Not a black hole.  At least as far as Section 33 is concerned, there is sufficient production from the Hosston wells to hold the lease in force as to all depths.  Therefore Comstock is not forced to drill a Haynesville well to hold the deep rights.  The company can afford to wait and drill when the section comes up in development plans.  Instead of getting a single well as would have happened in the first phase of Haynesville development, it is likely that Section 33 will be combined with one or more adjacent units and will get a group of long lateral wells.  If that's next year, I would expect natural gas prices to be improved.  So, much greater production volume and a better price will make a significant difference for mineral lessors.

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Permalink Reply by shelby on August 7, 2017 at 11:05

Skip,

Sounds like the way it will likely go. I wonder, in the situation the gas and oil industry is facing, how long they can go without conducting drilling and production operations, in depths that are proven; Haynesville and Bossier. I know there have been stirrings amongst land/mineral owners challenging outfits that don't have the means, to either "explore and produce" or release those deep rights allowing someone else to produce those zones. Where gas is priced now, and over the past couple of years, I understand a lot of large companies are letting leases technically lapse in a number of ways, lack of production being just one, but still a fundamental requirement of the Lessee to capture the resource. I don't have a pugh clause in my old lease, but, have read recent reports regarding oil companies being challenged, for failing to perform operations due to lack of profit margins available to them. The terms of all leases require them to conduct operations to exploit the resource; being that a proven gas reservoir exists beneath them, should they have the right to wait 15 years to exploit it?

Shelby

Permalink Reply by Skip Peel - Mineral Consultant on August 7, 2017 at 11:26

If you look hard enough, you can find an attorney willing to litigate almost anything.  A "demand to develop" action is a possibility.  I was an expert witness in one such suit that was decided in favor of the plaintiff at the district court level but overturned on appeal by the Second Circuit Court of Appeals.  It is time consuming and expensive to take legal action, the O&G industry makes sure of that.  If you want to explore such a suit, contact me off site and I'll refer you.

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Permalink Reply by shelby on August 7, 2017 at 11:42

Skip,

Thanks for your contact, and I will keep it in mind. I only have a 10 acre position on a 40 acre tract, so going up against the "big boys" is probably not a pursuable option. I think the State of Louisiana needs to turn the corner on this one, being that they are supposed to be the supreme arbitrator, to assure that the natural resource is being effectively and diligently exploited, and that the mineral owner is, and should be expected to receive a share of royalties, by way of payable quantities. When you get a list of 15 to 20 wells that are  "netting zero "0" on your check stubs, you've got to wonder what paying quantities mean. Tough times for everyone out there, and I am grateful to own land and minerals in one of the country's greatest plays.

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